Tycoon Andrew Tan’s Megaworld Corp. is aiming to put the Philippines on the global real estate investment trust (REIT) map by growing its office asset size to one million square meters in the next five to 10 years as it grooms MREIT Inc. to become the largest REIT in Southeast Asia.
Kevin Tan, president and CEO of Megaworld-sponsored MREIT, said the business process outsourcing (BPO) industry-focused REIT aims to deliver 500,000 square meters of office space by 2023 and eventually one million square meters, which would make it the largest office REIT in Southeast Asia.
“Our goal is to put the Philippines and MREIT on the global REIT map because of the size and quality of our REIT portfolio and our world-class tenant base. We believe we can easily achieve this because Megaworld already has 1.2 million square meters of existing office buildings and has a robust pipeline of new office developments spread across 26 business parks across the country,” Tan added.
He said the company remains bullish about the prospects of the Philippine BPO sector.
“Megaworld expects to maintain its undisputed leadership position as the Philippine office landlord of choice for the world’s leading IT and BPO companies,” Tan said.
MREIT aims to be the ‘country’s fastest growing REIT with the longest expansion pipeline’ amongst listed REITs on the Philippine Stock Exchange (PSE) as it plans to inject an additional 100,000 square meters of prime office assets to increase its portfolio to around 324,000 square meters by end-2022.
Its initial portfolio of approximately 224,431 square meters consists of 10 prime office buildings in three of Megaworld’s most established township locations that are popular amongst the biggest BPO companies operating in the Philippines.
These include 1800 Eastwood Avenue, 1880 East Avenue, E-commerce Plaza, One World Square, Two World Square, Three World Square, 8/10 Upper McKinley Building, 18/20 Upper McKinley Building, One Techno Place Iloilo, Richmonde Tower and Richmonde Hotel Iloilo.
Tan said MREIT’s current portfolio has been carefully curated to include only Grade A buildings accredited by the Philippine Economic Zone Authority (PEZA) with mainly BPO and multinational tenants.
“MREIT’s strategy is to be very focused on high quality office buildings with high quality tenants that are located inside an already established township. Throughout the years, our integrated live-work-play townships have proven to be successful in attracting better and stickier tenants, which in turn translates to significantly less tenant churn, consistently higher occupancy rates and sustainable escalating rental rates,” he added.
The P14.7 billion in proceeds of the initial public offering (IPO) of MREIT, together with the expected cash proceeds from the impending asset injection by Megaworld will help bankroll 15 projects over the next 12 months.
These projects of Megaworld are expected to significantly contribute to nation-building and job creation all over the country.
Megaworld will continue to own approximately a 62.1 percent stake in MREIT post-IPO.
“We only see this as the beginning of a very long growth runway. We thank investors for their trust and confidence in supporting our IPO. We are excited about the opportunity to grow and create value for our sponsor, our investors and for the country,” Tan said.
For his part, BDO Capital Inc. president Ed Francisco said MREIT’s IPO is priced at an attractive level of P16.10 per share to provide investors a compelling entry opportunity to become long term partners in MREIT’s goal of becoming the Philippines’ fastest growing REIT, backed by the country’s largest office landlord, Megaworld.
“As a result, the institutional book building attracted strong interest from both long-only foreign investors as well as domestic institutional investors,” Francisco said.
BDO Capital is one of the joint global coordinators on the IPO.